The Long Term Economic Impacts of Reducing Migration: the Case of the UK Migration Policy

Miguel Sanchez-Martinez, Katerina Lisenkova, Marcel Merette

Research output: Book/ReportCommissioned report

Abstract

This paper uses an OLG-CGE model for the UK to illustrate the long-term effect of migration on the economy. We use the current Conservative Party migration target to reduce net migration “from hundreds of thousands to tens of thousands” as an illustration. Achieving this target would require reducing recent net migration numbers by a factor of about 2. In presented simulations, we compare a baseline scenario, which incorporates the principal 2010-based ONS population projections, with a lower migration scenario, which assumes that net migration is reduced by around 50%. The results show that such a significant reduction in net migration has strong negative effects on the economy. The level of both GDP and GDP per person fall during the simulation period by 11.0% and 2.7% respectively. Moreover, this policy has a significant impact on public finances. To keep the government budget balanced, the labour income tax rate has to be increased by 2.2 percentage points in the lower migration scenario.
LanguageEnglish
Place of PublicationLondon
Number of pages32
Volume420
Publication statusPublished - 23 Dec 2013

Publication series

NameNIESR Discussion Papers

Fingerprint

Migration policy
Economic impact
Scenarios
Simulation
Tax rate
Population projections
Income tax
Factors
Labor income
CGE model
Government budget
Public finance

Keywords

  • migration
  • population ageing

Cite this

Sanchez-Martinez, M., Lisenkova, K., & Merette, M. (2013). The Long Term Economic Impacts of Reducing Migration: the Case of the UK Migration Policy. (NIESR Discussion Papers). London.
Sanchez-Martinez, Miguel ; Lisenkova, Katerina ; Merette, Marcel. / The Long Term Economic Impacts of Reducing Migration : the Case of the UK Migration Policy. London, 2013. 32 p. (NIESR Discussion Papers).
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abstract = "This paper uses an OLG-CGE model for the UK to illustrate the long-term effect of migration on the economy. We use the current Conservative Party migration target to reduce net migration “from hundreds of thousands to tens of thousands” as an illustration. Achieving this target would require reducing recent net migration numbers by a factor of about 2. In presented simulations, we compare a baseline scenario, which incorporates the principal 2010-based ONS population projections, with a lower migration scenario, which assumes that net migration is reduced by around 50{\%}. The results show that such a significant reduction in net migration has strong negative effects on the economy. The level of both GDP and GDP per person fall during the simulation period by 11.0{\%} and 2.7{\%} respectively. Moreover, this policy has a significant impact on public finances. To keep the government budget balanced, the labour income tax rate has to be increased by 2.2 percentage points in the lower migration scenario.",
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Sanchez-Martinez, M, Lisenkova, K & Merette, M 2013, The Long Term Economic Impacts of Reducing Migration: the Case of the UK Migration Policy. NIESR Discussion Papers, vol. 420, London.

The Long Term Economic Impacts of Reducing Migration : the Case of the UK Migration Policy. / Sanchez-Martinez, Miguel; Lisenkova, Katerina; Merette, Marcel.

London, 2013. 32 p. (NIESR Discussion Papers).

Research output: Book/ReportCommissioned report

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AB - This paper uses an OLG-CGE model for the UK to illustrate the long-term effect of migration on the economy. We use the current Conservative Party migration target to reduce net migration “from hundreds of thousands to tens of thousands” as an illustration. Achieving this target would require reducing recent net migration numbers by a factor of about 2. In presented simulations, we compare a baseline scenario, which incorporates the principal 2010-based ONS population projections, with a lower migration scenario, which assumes that net migration is reduced by around 50%. The results show that such a significant reduction in net migration has strong negative effects on the economy. The level of both GDP and GDP per person fall during the simulation period by 11.0% and 2.7% respectively. Moreover, this policy has a significant impact on public finances. To keep the government budget balanced, the labour income tax rate has to be increased by 2.2 percentage points in the lower migration scenario.

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Sanchez-Martinez M, Lisenkova K, Merette M. The Long Term Economic Impacts of Reducing Migration: the Case of the UK Migration Policy. London, 2013. 32 p. (NIESR Discussion Papers).